Oyo, the Indian budget-hotel chain startup, is finalizing a fresh funding round of about $100 million to $125 million, reducing its valuation to $2.5 billion, according to sources familiar with the matter. This marks a significant drop from the Gurgaon-headquartered startup’s 2019 valuation of $10 billion. Struggling to attract institutional investors, Oyo has been pitching to high-net-worth individuals recently.
A representative of InCred, a financial firm working with Oyo, conveyed in a message to a startup founder, “We genuinely feel that this asset makes a lot of sense today. Being profitable and @70% discount to the previous valuation. Listing expected in 18-24 months.”
Last month, they reported that Oyo was seeking funds at a $3 billion valuation or lower, which Oyo denied at the time. The new funding round is expected to increase in size, according to sources who requested anonymity.
This funding comes after Oyo shelved its IPO plans last month. The startup, backed by SoftBank, Peak XV Ventures, Lightspeed, Airbnb, and Microsoft, has withdrawn its IPO application from the Securities and Exchange Board of India twice in the last four years.
Oyo initially filed for a public listing in 2021 but withdrew and refiled in 2023. Having raised over $3 billion to date, it aimed to raise $1.2 billion at a $12 billion valuation in the 2021 IPO.
Once a leading Indian startup, Oyo provides an OS for hoteliers to manage digital bookings and payments. Although it once operated in markets including the U.S. and Europe, it has since scaled back its international presence.
The startup recorded a net profit of $12 million in the financial year ending March, according to founder and CEO Ritesh Agarwal. In 2019, Agarwal took a $2 billion debt to increase his stake in Oyo, valued at $10 billion then, investing $700 million as primary capital and spending $1.3 billion on a secondary purchase of Oyo shares. The status of this debt remains unreported.
The Economic Times also reported the new funding on Monday, noting that Oyo will seek approval from existing shareholders for the funding this week.
